Playing Politics With Revenue Estimates

Keith Phaneuf’s CTMirror article yesterday, entitled “Revenues plunge, state deficit widens, forcing Malloy to close big gap,” touched on one of the more recent and “unique” attempts at bringing fiscal accountability to Connecticut State Government.

Back around 2009, Governor Jodi Rell and her Office of Policy and Management had a tendency to misrepresent the state’s revenue and expenditure data in order to make it appear that the state budget was more balanced than it actually was. Some recall this was the time period when Rell allowed the Democratic Legislature’s budget to become state law without her signature, while claiming that she opposed the budget. Rell even went so far as to attempt to illegally use her line item veto authority to remove certain expenditures, but alas, the court ruled that she could have only used that authority if she had actually signed the budget, not simply allowed it to go into law without her signature.

In any case, in revenge for refusing to be honest about revenue estimates, and in a fit of dedication to fiscal accountability, the Legislature passed Senate Bill 1162, AN ACT REQUIRING CONSENSUS REVENUE ESTIMATES. Public Act 214 required the Governor’s Office of Policy and Management (OPM) and the Legislature’s independent Office of Fiscal Analysis (OFA) to meet and provide state policymakers with “consensus revenue estimates” by October 15 each year, and revisions to those estimates, if needed, in January and April of each year.

If the two entities can’t agree, the responsibility for issuing the consensus would fall to the State Comptroller.

This fail safe solution would force Governor Rell, or any Governor, to be more honest with the General Assembly, the public and the media.

It certainly seemed like a good system, but as the more politically astute among you may note, there was only one problem – and it was a problem of potentially catastrophic proportions

Knowing that the budget is out of balance is arguably a good thing, no matter which political party controls the Executive or Legislative Branches, but if you are the incumbent party, the very last thing you want is for that information to come out on October 15th of an election year.

Imagine all the media reports and potential public outcry that would occur, just two weeks before the election, if voters were to learn that the budget that had adopted was out of balance and that budget cuts and/or tax increases would soon be needed.

So, to rectify the problem, on June 22 of this year, during the Legislature’s short special session, the General Assembly passed Senate Bill 501.

The bill, which became Public Act 12-2, made a minor change in the consensus revenue estimate law.

Whereas section 2-36c of the Connecticut State Statutes required that consensus revenue estimates be released not later than October fifteenth of each year, the new law deleted the words October fifteen and replaced them with the words November tenth.

Ta-dah! Problem solved.

The day before the election, the projected state deficit was $60 million.

Three days after the election, it turns out that the state deficit is more like $300 to $350 million.

Say what you want about elected officials, but it was a pretty brilliant maneuver.

For a rather “humorous” look at the issue, read Keith Phaneuf’s story from October 18th where he writes about the Republican’s concern that the Office of Fiscal Analysis is projecting a state deficit that is significantly higher than the Malloy Administration is claiming.

Malloy’s chief spokesman responded, “The closer we get to Election Day, the more desperate the Republicans become. The more desperate they become, the more heated their rhetoric becomes. The more heated the rhetoric, the more they play fast and loose with the facts. They should probably just take a deep breath and begin coming up with the excuses they’ll need to explain away another failed campaign season.” – Roy Occhiogrosso 10/18/12

And Malloy’s budget office added, “While we always monitor revenue and spending, we’re in the process of doing our own analyses and it would be premature to comment either way” – OPM’s Gian-Carl Casa 10/18/12